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Now showing items 21-34 of 34
  • Kuusisto, Minna; Newby, Elisa (2014)
    Bank of Finland. Bulletin. Monetary policy and the global economy 4
    The Eurosystem currently implements monetary policy in circumstances that are very different from those of the early years of the financial and debt crisis. The Governing Council of the ECB has pursued an accommodative monetary policy and lowered the central bank’s policy rates close to zero, meaning that the scope for lowering the expected real interest rate by deployment of traditional monetary policy instruments is now limited. Inflation expectations that are lower than the Eurosystem’s objective of price stability raise the real interest rate. This article looks at the non-standard monetary policy instruments with which, despite the zero lower bound, the Eurosystem has been able to steer market interest rates and strengthen expectations of a continuation of the accommodative monetary policy stance.
  • Kortela, Tomi (2015)
    Bank of Finland. Bulletin. Monetary policy and the global economy
    Euro area inflation has long been below the European Central Bank’s objective for price stability and has continued to slow in recent months. This has given rise to heightened concerns that the euro area could soon be facing a prolonged period of deflation, as recently in Japan. The case of the United States shows, however, that the Japanese experience can be avoided. The key would seem to be the anchoring of inflation expectations. In the euro area, new measures of monetary accommodation have contributed to reducing the risk of Japanese-style deflation.
  • Herrala, Niko; Parviainen, Seija (2014)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1
    Japan's policy of actively stimulating the economy has been dubbed Abenomics, after Shinzo Abe, who was elected as prime minister a little over a year ago. The main objective of Abenomics is to bring Japan on to a permanent growth trajectory and leave behind the prolonged deflationary spiral. The Bank of Japan has set a 2% inflation target, which it supports with a monetary policy of zero interest rates and quantitative easing. Both recorded inflation and consumers' and market inflation expectations have firmed up in recent months. It is, however, unclear to what extent the current performance of the Japanese economy is a consequence of the policies pursued and whether the changes will be permanent.
  • Kauko, Karlo (2013)
    Bank of Finland. Bulletin. Monetary policy and the global economy 4
    The Basel III regulatory framework involves the introduction of the first internationally harmonised regulations on banking liquidity. The new regulations are largely a consequence of the storms experienced on the financial markets in recent years. In autumn 2008, a lot of banks found themselves in liquidity difficulties, when the markets for many securities and financial contracts previously considered liquid ground to a halt. The point of the new regulations is to force banks to protect themselves from these types of problems. This article presents the background to the liquidity reform and assesses liquidity regulation with the aid of theoretical economic models.
  • Melolinna, Marko; Vauhkonen, Jukka (2011)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1/2011
    Macroprudential policy is aimed at reducing the systemic risks that develop or gain strength within the financial system and whose realisation would have serious r epercussions for the real economy. Successful macroprudential policy reduces the probability and potential severity of a financial crisis and thus promotes long-run economic growth. Macroprudential policy can increase the ability of the financial system to withstand a crisis eg by requiring financial institutions to maintain larger-than-normal capital and liquidity buffers during good times and allowing them to run them down when times are not so good. Having some common goals and transmission channels as well as occasionally being at odds provide a rationale for coordination of macroprudential and monetary policy.
  • Hukkinen, Juhana; Kauko, Karlo (2011)
    Bank of Finland. Bulletin. Monetary policy and the global economy 4
    The financial crisis that began in 2007 has demonstrated that financial market disruptions can have substantial effects on the economy. There have been calls for reform of the regulations governing credit institutions, insurance companies, derivative markets and securities trading, in order to foster financial stability. This article explores various means available to government for both preventing financial market crises and mitigating the economic consequences of any disruptions that do occur. The main focus is on identifying means for enhancing the stability of the banking system.
  • (2011)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1
    Monetary policy and the global economy 1 Finland's economic outlook 2011-2013 19 How can we indentify risks to macrostability? 38 Heidi Schauman, Economist Monetary Policy and Research Katja Taipalus, Economist Financial Markets and Statistics Macroprudential policy and its relationship to monetary policy 52 Marko Melolinna, Economist Monetary Policy and Recearch Jukka Vauhkonen, Economist Financial Markets and Statistics New facilities help safeguard financial stability in Europe 67 Jenni Hellström, Dealer/Market Analyst Banking Operations
  • Hasko, Harri (2012)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1
    Prior to the escalation of the financial market crisis in 2008, nominal interest rates on household and corporate loans in the euro area were relatively uniform and closely followed the policy rates of the European Central Bank (ECB). In contrast, there have been major differences all along between euro area countries in respect of debt accumulation. The key explanatory factor for these differences was the faster rate of inflation in some peripheral countries. As a result, real interest rates in these countries were lower than elsewhere and debt accumulated more rapidly.
  • Hellström, Jenni (2011)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1/2011
    The unsustainable level of govern ment debt in Europe began to threaten financial stability in 2010. Highly indebted governments agreed to adjust their finances, but a solution to the sovereign debt problems also required enhanced coordination of economic policy between EU countries and instruments for financing the adjustment programmes of the financially distressed countries. The negotiations over the support package for Ireland marked the beginning of new financial stability arrangements. Debt issuance by the European Financial Stability Facility and the European Financial Stabilisation Mechanism has got off to a good start, and the first loans to Ireland have already been paid via these channels. Even so, the financial markets still expect yields on euro area peripheral government bonds to remain high until a permanent, comprehensive solution to the sovereign debt problems has been found.
  • Vilmi, Lauri (2012)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1
    In 2007-2009, many central banks cut their policy rates sharply in an attempt to stave off deflation, ie a broadly based fall in prices, and to support developments in the real economy. With interest rates falling dose to zero, central banks resorted to non-standard policy measures. These included a long-term commitment to maintaining a low level of interest rates, the expansion of central bank balance sheets by increased provision of central bank money to the economy (quantitative easing) and changes to the structure of the central bank balance sheet, for example by purchasing long-term debt securities and selling short-term ones. This article focuses on exploring the conduct of a policy of quantitative easing and the experiences gained.
  • Melolinna, Marko (2014)
    Bank of Finland. Bulletin. Monetary policy and the global economy 4
    Structural reforms will boost long-term economic prosperity in the euro area. In the short term, reforms could weaken economic performance. Nevertheless, on the whole, both an empirical and a theoretical examination of structural policy in the euro area strongly suggest there is an urgent need for structural reforms. These provide the only way to boost the potential output of the economy in a situation in which the long-term prospects for many euro area economies and the outlook for general government sustainability look bleak.
  • Solanko, Laura; Vilmi, Lauri (2013)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1
    Two major shifts in global energy markets have occurred over the past ten years. First, emerging economies now drive growth in global energy consumption and use more than half of all energy produced globally. The growth emphasis has clearly shifted to emerging economies. Second, traditional energy markets have been challenged by the arrival of unconventional hydrocarbons and plentiful liquefied natural gas. Renewable energy sources continue to meet an increasing share of consumption, yet even a few decades from now they will account for less than 20% of overall production. At the same time, access to unconventional oil and gas deposits has driven down production costs, especially in the United States and Canada. This has led to a dramatic drop in natural gas prices in North America even as energy prices have remained high in Europe.
  • Välimäki, Tuomas (2014)
    Bank of Finland. Bulletin. Monetary policy and the global economy 1
    At the height of the financial crisis some weeks after the collapse of Lehman Brothers, the Eurosystem adopted a full allotment policy in the refinancing of banks. The move from variable rate tenders and controlling the amounts of liquidity provided to the banks towards fixed interest rates was necessary when the financial intermediation capacity of the banking system had been paralysed and the traditional way implementing monetary policy had led to a significant increase in the price of central bank liquidity provision. This article examines how ensuring banks' access to liquidity through central bank operations has resulted in a situation where, for five years already, short-term money market rates have been lower than the interest rate on the main refinancing operations (MRO rate), that is, the Eurosystem's traditional key steering rate. The article discusses central banks' short-term challenges in the steering of interest rates and outlines a longer-term operational model that would enable the dual use of credit operations both for steering interest rates and, in parallel, for ensuring the availability of central bank funding. The model is based on a differentiated use of collateral in different types of operations conducted by the Eurosystem.
  • Kerola, Eeva (2014)
    Bank of Finland. Bulletin. Monetary policy and the global economy 4
    Lending to households and non-financial corporations has been sluggish and credit standards have continued to be tight in many euro area countries. In June 2014, the Governing Council of the ECB decided to support bank lending to the corporate sector by pledging to commence a series of targeted longer-term refinancing operations. Although the significance of the banking sector in the transmission of monetary policy to the real economy is considerable, the factors behind changes in banks' credit standards in the euro area have not been empirically analysed. With the help of the ECB's Bank Lending Survey, a survey of bank lending and credit demand in the euro area, this article examines to what extent the changes in the terms of credit for corporate loans are due to supply and demand factors, how the size of a company applying for credit affects the terms applied and how the situation in stressed countries differs from that in other euro area countries.